Austerity or how to screw both the economy and the poor

 

 

While discussing with (economically) right-wing people, some of them confess to me that free-market capitalism without any State intervention can be quite detrimental to the life standards of the lower classes.

I commented on a tragic consequence of this which happened in Britain not long ago.

But they then go on saying that the alternative (the State stepping in to protect the welfare of people) is practically impossible because it allegedly leads to a collapse or a significant weakening of the economy. And this in turn would naturally also have dire repercussions on these poor people.

They then argue that laissez-faire capitalism is the best system for allowing mankind to flourish because any stronger regulations inevitably undermine the financial health of the country.

In spite of their natural selfishness and rapacity, business people are led by an invisible hand and thus without intending it, advance the interest of the society
Adam Smith: self-interest takes care of everything.

So according to this doctrine, an “invisible hand” emerging out of the actions of numerous selfish agents ends up producing the most optimal world given human nature.

Self-interest + competition = invisible hand
The Invisible hand at work.

That sounds really great (albeit saddening) in theory.

But how does that work out in practice?

British Chancellor of Exchequer George Osborne provides us with a nice counter-example.

We're going to continue to squeeze public spending well into the future, with cut after cut, even if we do meet our deficit.  Austerity for ever!
Austerity according to Osborne (or his detractors).

Comparisons with his more interventionist predecessors don’t look too flattering.

George Osborne has created more debt in four years than every single government in history combined...So why do so many people still rate the Tories as the most economically trustworthy party?
Osborne overcoming the debt?

I personally strongly doubt that Wild Capitalism (the economy takes care of everything) prevails because it is the best system for us all.

I think that it dominates our world because it creates the best conditions for a SMALL wealthy minority which holds humanity in its grip through oligarchical structures and an efficient manipulation of public opinion.

In a previous post, I have laid out the bases of Christian socialism. Regardless of your own worldview, if you sincerely care for justice and alleviating human suffering, I think you should start thinking more critically on the moral virtues of a world driven by the callous forces of stock market.

The fact that former communist dictatorships have atrociously failed  gives us absolutely no reason to think that people would not be much better off with a moderate Capitalism where the State intervenes to protect the well-being of defenseless people whenever they are threatened by the impersonal forces of trade.

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